New age of electricity needed to avoid future shock
The barriers to exploiting the massive potential of renewable energy in onshore and offshore wind power must be overcome, says Werner Kruckow
ASUDDEN global energy shock could see Ireland's Gross Domestic Product (GDP) fall by 7.5 per cent, but with this risk also comes the opportunity to bring about a new electricity age here.
Seizing this opportunity now, before we get caught out by an energy shock -- something which is no longer unthinkable in the wake of the peak in the oil price that we saw in 2008 -- must be a priority not just because of the environmental benefits, but because it will also create jobs, enable small businesses to grow and improve our energy security.
By first looking at the problem -- the fact that we have a 96 per cent reliance on mainly imported oil and gas for our energy needs -- in the areas of transport, heating and power, we can clearly see that a sudden hike in the price of oil and gas would have a far greater impact on Ireland than on other economies such as the United Kingdom and the United States.
Working on the basis of either a steady rise or an accelerated, steady but rapid rise in the price of oil and gas between 2013 and 2025, to between $190 and $260 a barrel -- figures that many international energy observers say are conceivable -- analysis by the Economic and Social Research Institute shows Ireland would be the worst hit economy in Europe. While the wider euro area would bottom out at a 4 per cent drop in economic activity, in 2025 Ireland would see its GDP plummet by 7.5 per cent.
Although we already spend about €6bn a year on fossil fuel imports, this figure would obviously rise as the result of an energy shock, making us less competitive at a time when the demand for our exports would be reduced as the rest of Europe slows down. Volatile energy prices also create market uncertainty, hindering investment plans, further reducing the prospect of economic growth.
On a broader level, higher energy costs put a greater financial burden on those on lower incomes and lead to fuel and energy poverty. Increased fuel costs have an impact on everyday mobility, constraining commuting and leisure travel decisions.
But it doesn't have to be like this: we can turn this threat into an opportunity by using it as the impetus for a new electricity age.
If there are barriers to exploiting our considerable renewable energy resources, in onshore and offshore wind power -- in the area of planning, for example, then Ireland Inc has to make a decision to act fast to overcome them.
We at Siemens believe in projects such as the Spirit of Ireland project (which involves using wind energy to pump seawater into artificial reservoirs, storing it so that it can be used to turn a hydro turbine and generate electricity when the wind isn't blowing) not just because we would benefit as a key supplier of turbines and other technology, but also because of its wider benefits.
It would boost Ireland's international competitiveness and attract further foreign direct investment by providing considerable energy security while leading to predictable energy prices for clean electricity.
Jobs in construction, maintenance, specialist services and even manufacturing technology related to wind energy would also be created.
Further development of wave and tidal energy technology in the west of Ireland would also make this country a key, green energy hub in the evolving European power grid.
Key to this is the vital upgrade of our national electricity grid, and here again decisions in the national interest should be taken where necessary so that the rolling out of a smart grid is not unduly delayed by obstacles or planning issues.
Not only must we radically transform how we generate our energy, but we must also use it much more efficiently, particularly in how we power, heat and cool our buildings.
Wind and tidal power would make Ireland a key green energy hub
Companies such as Bord Gais are already creating jobs by rolling out new services that show householders how they can cut their heating, lighting and electricity bills through insulation, LED lighting and other energy efficiency measures. Direct and indirect jobs are slowly being created as similar services are rolled out to commercial buildings such as offices, shops and factories. Tax incentives and favourable financing models would provide a further boost to this activity.
The final cornerstone of a new electricity age is the creation of a test-bed environment where start-up companies can work alongside established ones to invent new products, services and technologies and to improve existing ones. This is already beginning to happen, as we have seen with the ESB and electric cars and Dublin Bus trialling a new bus that runs on Siemens hybrid drive diesel-electric technology.
In the months ahead, we at Siemens will recommend further measures to the Government so that we can build on this momentum as we move towards a new electricity age.
Werner Kruckow is the chief executive of Siemens Ireland
• Series compiled by John Reynolds